Bajaj To Fund More To Counter Hero Honda

By By: Vicky.in

Published: Monday, January 31, 2011, 10:51 [IST]

As Tata Motor has found a new track to drive its Nano from slide, now is the moment for the two wheeler giant Bajaj. With a motive to counter the growing market share of Hero Honda, Bajaj is all set to take on the rival. The initial move is to enter into all major rural and semi-urban areas which constitutes nearly 50% of the net market of two wheelers. As a first step of the auto gaint is on the verge of appointing 135 dealers in such regions of semi urban and metros. So far it had just 25 dealers for these areas and more so it throws its weight with financial assistance. The company"s Business president for motorcycles said they are on the move to redesign the distribution system to gain more momentum.

The focus will hereinafter be on bigger market, he added. He said the new dealers will operate from March end and for every 10 new dealers there will be 6 in small towns. The remaining will be operational from mini metros who will execute special financial assistance under its own Auto Finance. Under the scheme, there will be disbursal of direct cash collection facility by which the customers are at their will to pay the installments.

The feature of this loan extension is that the customers need not provide any guarantee nor any collateral to avail the loan. Bajaj extends this assistance purely on trust and preliminary verification of data from the customer, he added. The company has introduced this scheme on select areas on experimental basis and found the reduced defaulters than the system under post-dated cheque guarantee. In addition, for select customers like agriculturists and traders it is contemplating on introducing seasonal collection of installments. Under this scheme, such customers can pay installments on phases such as every two or three months. The industry analysts view Bajaj"s strategy as a positive move to boost the sale at least by 30% in its market where it has 27% share.

In the two wheeler market Hero Honda has the lion"s share with 54% market shares where in it has two thirds in the rural areas. Bajaj has got 45% market share in the interior regions through its Discover. The company foresees prospects from these potential regions as a result of good rains, enhanced crop productivity and farming rise have added income to such people. Also on the scale of growth is the rural job assurance scheme and various development projects mooted by the governments.

However, they claimed that the margins may be less in accordance with the rise of input costs.